CSBS Issue Briefings - August 2020

• Congress recognized the value of state autonomy in protecting consumers while allowing for beneficial innovation in financial markets by intentionally prohibiting the federal government from setting a national usury rate for nonbank financial services providers. • State specific regulatory regimes for small dollar lending illustrate the challenge of forcing a one- size-fits-all federal regulatory framework for the non-depository financial services industry. • Federal rulemaking would set a floor and not a ceiling for consumer protection. • State regulators oppose any federal agency action that fails to respect the ability of states to control interest rates and limits their ability to impose additional consumer protections for small-dollar credit products. • Recent guidance on responsible small dollar lending by banks should help to clarify regulatory uncertainty • Banks can look to U.S. Banks Simple Loan product as an example of a successful implementation of a small-dollar loan product that fits the criteria outlined in the recent agency guidance.

SME Contact: Daniel Schwartz, Director, Policy Development: (202) 728-5742 or DSchwartz@csbs.org

Date Updated: 08/31/2020

FOR STATE REGULATOR USE ONLY